HS2 Contract Reset Could Avoid £2bn of Future Cost Risk

HS2 is approaching deals to reset its final two major civils contracts. The headline number is significant: chief executive Mark Wild says the revised commercial approach could avoid up to £2bn of future cost risk.

But the more useful construction story is not another argument about how much HS2 costs. It is what happens when the commercial model behind one of Britain's biggest infrastructure projects changes.

Good engineering alone does not determine whether a project performs. The contract behind it matters too.

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The Final Two HS2 Civils Contracts Being Reset

The remaining negotiations involve two major joint ventures:

• Balfour Beatty VINCI (BBV), responsible for around 90km of HS2 through the West Midlands.
• Skanska Costain STRABAG (SCS), delivering approximately 21km of tunnels between West Ruislip and Euston in London.

Wild told the Public Accounts Committee that he expected negotiations with both joint ventures to conclude within two months. These are the final two main civils packages still being reset.

HS2 has already reached revised agreements with its other two main works civils contractors:

• EKFB — Eiffage, Kier, Ferrovial Construction and BAM Nuttall — is delivering around 80km between the Chiltern Tunnel north portal and Long Itchington Wood.
• Align — Bouygues Travaux Publics, Sir Robert McAlpine and VolkerFitzpatrick — is responsible for 24km including the Chiltern Tunnel and Colne Valley Viaduct.

Together, those two revised contracts cover more than 100km of the railway.

Source: Construction Enquirer, 15 September 2026

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Why HS2 Is Changing the Commercial Model

The original main civils agreements were reimbursable, cost-plus contracts. According to Wild, insufficiently developed designs meant too much risk ultimately returned to HS2.

That is not simply a story about contractors charging too much. It is a story about the structure in which everyone was operating.

If a contract does not create meaningful pressure to reduce cost, improve productivity or accelerate the programme, it becomes much harder to align every organisation around those outcomes.

The reset does not tear up the original agreements and start again. The revised deals retain the existing contracts but add payment incentives linked to:

• cost control,
• efficiency,
• programme performance,
• and earlier completion.

The intention is to create more commercial pressure on delivery partners to control expenditure while progressing the work more quickly.

Wild cautioned that the revised agreements were not a perfect solution. They cannot completely fix problems inherited from the original procurement model. What they can do is reintroduce commercial tension: contractors have stronger financial reasons to minimise cost and improve delivery.

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£2bn of Avoided Risk Is Not a £2bn Saving

This distinction matters.

HS2 has not announced that £2bn has been cut from the final project cost. The claim is that the revised arrangements could avoid up to £2bn of future cost risk.

That means reducing the likelihood of additional costs developing through the remaining civils programme. It is a forecast of exposure that might be prevented, not cash already saved or a guaranteed reduction in the final bill.

On a project the size of HS2, controlling future exposure can be just as important as finding an immediate saving. But the two should not be confused.

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The Procurement Lesson for UK Contractors

You do not need to be delivering a 90km railway package for this to matter. The same commercial principles appear on projects of every size.

Construction procurement often focuses heavily on the number submitted at tender stage. The eventual cost of a project, however, is influenced by far more than the original tender figure:

• design changes,
• risk allocation,
• programme disruption,
• compensation events,
• poor coordination,
• incomplete information,
• unclear scope,
• and weak incentives.

A badly structured contract can make a cheap procurement decision extremely expensive later. HS2 is a very large example of the same principle.

When scope is unclear, somebody still carries the uncertainty. The question is whether that risk is properly understood and allocated before work starts, or discovered halfway through delivery.

Better procurement does not mean transferring every possible risk onto the contractor. It means identifying which organisation can actually manage each risk and designing the commercial arrangement around that reality.

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Contracts Shape Everyday Project Decisions

A contract is not just paperwork sitting behind the project. It changes how people make decisions every day.

If contractors benefit from early delivery, they have an incentive to find programme efficiencies. If cost overruns simply pass through to the client, there is less pressure to challenge them. If productivity improvements are rewarded, teams have a reason to search for them.

That does not replace good project management. It creates the commercial environment in which project management operates.

One sign of the scale of the reset is the change to the EKFB agreement. Wild said its contract exclusions had fallen from several hundred to fewer than 20. HS2 has also worked through outstanding contractual disputes and potential claims as it prepares for the wider project reset.

This work matters because a renegotiated headline agreement only takes a project so far. Design, sequencing, target costs and the handling of unresolved liabilities still determine whether new incentives work in practice.

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What the Reset Means for the HS2 Supply Chain

It is easy to talk about HS2 as though it were simply four joint ventures building a railway. Underneath those delivery organisations sit specialist contractors, manufacturers, consultants and suppliers.

The companies at the top of the programme may already have been selected, but supply chains continue to change throughout delivery. Stronger pressure on cost, productivity and programme is therefore likely to move down through those supply chains.

That does not have to mean a race to the bottom on price. It means suppliers need to show how they help the main contractor deliver more predictably. That could include:

• reducing programme time,
• simplifying coordination,
• providing stronger technical support,
• reducing site labour,
• preventing rework,
• solving difficult access or sequencing problems,
• giving better cost certainty,
• carrying clearly understood risk,
• and providing evidence of similar delivery elsewhere.

The strongest specialist suppliers are rarely valuable simply because they can complete a package. They make the overall project easier to deliver.

That becomes even more valuable when the main contractor is under pressure to improve programme and cost performance. The recent rise in subcontractor usage across UK construction makes the point more broadly: opportunity grows for firms that can make their value visible before a package reaches the enquiry stage.

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Programme Pressure Is Driving the Reset Too

The commercial reset is not only about cost. Wild said the objective is to complete the major civil engineering work in 2029, allowing track installation to begin in March of that year.

HS2 is therefore trying to create a commercial structure capable of getting the remaining work over the line, not merely renegotiating historic problems.

The next test is the detailed programme and construction sequence. According to Wild, this will be a major focus over the six months leading to the wider April reset target. Rolling stock and the two principal station contracts must also be rebased, although he suggested their contracts would need less radical change than the main civils packages.

This sits within the Government's broader effort to concentrate resources and delivery scrutiny on major programmes that remain active. Our analysis of the Whitehall major projects pipeline reset explains why that creates a smaller but more demanding market for the contractors pursuing public infrastructure work.

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Better Contracts Can Change Project Behaviour

Whether the new HS2 arrangements achieve their aim remains to be seen. The direction is clear, though:

• more cost accountability,
• more programme pressure,
• more focus on productivity,
• and stronger incentives around the outcome HS2 needs.

There is a useful lesson beneath the politics. Construction performance is shaped by commercial structure as much as engineering capability.

A project can have excellent contractors, engineers and site teams and still produce poor outcomes if its incentives push everyone in the wrong direction.

HS2's latest reset is effectively a £2bn test of that idea. If it works, the result will not simply be a lower level of future cost exposure. It will be evidence that better contracts can materially change how major construction projects behave.

That lesson reaches far beyond HS2.

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